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The Honolulu Advertiser
Posted on: Wednesday, September 10, 2003

Employers brace for insurance-rate increases

By Dan Nakaso
Advertiser Staff Writer

Arnold Hirotsu has been getting a lot more attention from small- and medium-sized business owners since Kaiser Permanente Hawaii last week said it wants to raise rates an average of 14.5 percent starting in January.

Glenn Uejio of The Slipper House at Ala Moana looks over a display table with sales associate Alma Mateo. Uejio hopes "plenty attitude" among his employees will increase sales and offset any hike in insurance rates.

Bruce Asato • The Honolulu Advertiser

Hirotsu is president of PSH Insurance, one of only a handful of Hawai'i medical and life insurance brokerage firms that represent all four Island carriers — Kaiser, HMSA, HMAA and University Health Alliance.

"All of our clients are looking for as much rate relief as possible," Hirotsu said. "Since Kaiser made the announcement, we've had many, many calls from clients wanting to get a better handle on what to expect."

Turning to brokers for help is just one of many hopes for frustrated business owners who are bracing for rate increases in the next few months from Kaiser and possibly HMSA, Hawai'i's two largest insurers.

But they're not hearing any easy answers. Or at least answers that don't push the extra costs onto employees.

"It's going to be a hefty increase," said Tom Jones, president and co-owner of the two Gyotaku restaurants. "You either absorb the increase or you could reduce some of the nonmandated benefits that you provide for employees. ... I have yet to determine our course of action."

Some businesses with good health records can find better deals by switching insurers. But Hirotsu doesn't recommend hopping from carrier to carrier.

Insurers are less likely to offer good rates to companies that frequently change carriers, Hirotsu said. And even one catastrophic illness or injury could negate any savings.

He does suggest companies adopt health and wellness programs that could include quitting smoking, losing weight or controlling diseases such as diabetes. The programs promote healthier lifestyles that — in the long run, at least — could lead to employees using their health plan less.

"Rates would not necessarily go down," Hirotsu said. "But it could slow down the rate increases."

Other suggestions would adjust benefits such as dental or prescription drug plans or raise employees' share of the costs.

Jones, who is also secretary for the board of directors of the Hawai'i Restaurant Association and the group's past president, said some restaurants may consider raising prices. Or they might turn to buffet service to reduce the number of employees.

He's open to a range of cost-cutting measures at the Gyotaku restaurants that include reducing the company's contributions to employees' 401(k) funds or reducing pay increases. Or he might postpone capital improvement projects such as roof repairs and painting.

"Those things might have to wait," Jones said.

But none of those options is acceptable to Glenn Uejio, owner of The Slipper House at Ala Moana Center.

Uejio believes employees — not customers — are the foundation of business success.

The Slipper House's 24 employees belong to HMSA, which raised rates 9.87 percent for small businesses in June. HMSA will file its next rate request sometime around January.

Uejio already has told his employees to expect insurance costs to go up. He won't increase prices to compensate and he doesn't expect employees to pay more for their health insurance.

But he does hope that everyone will work harder to increase sales to cover the extra expense.

"We'll just roll with it," said Uejio, who has become famous in small-business circles for his upbeat emphasis on employee morale.

"We'll use this negative and turn it into a positive," Uejio said.

Uejio says dealing with rising healthcare costs is not unlike the hassle of getting nearly 20 employees to and from work who normally ride TheBus.

Uejio has organized the handful of employees who have cars and transformed them into a car-pooling system that allows all of them to talk story and share their lives during the citywide bus strike.

Like strike, Uejio is certain that some good — at least in the form of higher sales — will come out of rising health insurance.

"Don't need aptitude," Uejio said. "Just need plenty attitude."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.